Climate TRACE Inventory Update Poses Enhanced Opportunities And Risks For Carbon Emissions Management

Climate TRACE Inventory Update Poses Enhanced Opportunities And Risks For Carbon Emissions Management

At COP28, Climate TRACE, a global coalition for independent remote emissions tracking, unveiled its latest emissions inventory with a substantial increase in scope. The Climate TRACE platform, an open-source emissions database, now includes emissions estimates for more than 352 million assets worldwide, a 4,400 times increase on the coverage of the previous year’s inventory. Key findings of Climate TRACE’s inventory include a 1.5% increase in global emissions from 2021 to 2022 – 17% of emissions increases were due to oil and gas production in the US and Iran and electricity generation in India. Methane emissions also grew by 1.8%, driven by the Chinese coal industry.

The enhanced coverage of the Climate TRACE inventory increases its value to both corporate and non-corporate users. Several firms – including GM, Polestar and Tesla – have begun working with Climate TRACE to enhance their supply chain emissions management capability across steel and aluminium suppliers. Climate TRACE will allow these organizations to fill data gaps by collecting asset-level supplier data, validate primary emissions data provided by suppliers, and assess the accuracy of secondary data estimates calculated using emissions factors. Several service and software providers are also collaborating with Climate TRACE to enhance their corporate offerings: ecoinvent is working to merge the Climate TRACE inventory with its life cycle database and Climateiq is using Climate TRACE data to expand its emissions factor database across several supply chain categories. Finally, the Climate TRACE inventory enhancements also increase its applicability and value to the financial sector; Clarity AI is integrating Climate TRACE data into its risk analysis for investment firms and Joint Impact Model is using Climate TRACE data to measure the impact of investment portfolios.

Increasingly, the range and rigour of the Climate TRACE inventory, as well as other third-party satellite-generated databases, present corporates with both substantial opportunities and significant risks. This data can be used to efficiency collect and verify external sources of emissions. But it also increases potential exposure of misreported emissions data and puts more granular data at the fingertips of potential investors, clients and regulators, leading to possible legal, reputational and financial consequences. This latest development is a large step towards a world where every self-reported asset-level emission metric can be compared and verified against externally generated measurements. Firms should see this as a wakeup call to step up efforts to increase the traceability and accuracy of asset-level emission disclosures before third-party estimates become a single source of truth for any interested third parties.

To find out more about the use of geospatial solutions in emissions management, read Verdantix Market Overview: The Business Case And Solutions For Methane Mitigation.